Are gas prices really that high?

Mar 22, 2011

Since we’re on the subject of US gas prices, let’s take a look at how they compare to the rest of the world. Having talked to some of my international friends a while back, I already knew that gas is relatively cheap here, what with all of the government subsidies and what not.

But of course we still complain. I see $3.90 per gallon and I can’t help but give the stink eye, while our friends over there in the UK are forking over nine bucks per gallon.

The map above shows typical prices for RON 95 petrol, as they compare to the United States’. Countries colored red typically have higher prices, while those colored green typically have lower prices. Wikipedia didn’t have data for all countries, unfortunately, but there’s enough there to get the idea (minus African countries).

Why in the world does Venezuela have such incredibly low gas prices at 9 cents per gallon?

They also don’t tend to drive nearly as far on average/on a regular basis. I see my relatives cringe at the thought of having to drive an hour to get somewhere whenever I visit whereas over here I think nothing of driving 3 hours to go up north for the weekend.

You do realize it’s not the US “subsidies” that make gas cheaper here in the USA, but it’s all the enviro- and socialist TAXES applied to fuel in Europe to modify behavior (use less) and fund their social/progressive programs.

Of course, those subsidies don’t include the cost of the wars we’re fighting in the Middle East and all the sunk investment in infrastructure for auto travel that we began in the early 1900s, intensified during the Great Depression, and continue to this day. Even if there were no more direct subsidies, suggesting United States’ policy doesn’t favor gas would be like giving every American a free PC and denying that you’re doing Microsoft any favors.

I disagree Geoff, those direct subsidies are attempts by the IRS to socially engineer how corporations spend capital, so the corporation can lower its EBIT or EBITDA.

Fuel in the US does not have subsidies, but has excise taxes on it which inflates the cost of gasoline / diesel. Ultimately these costs are imbedded into the price and the consumer or end-user ALWAYS bear the total cost for.

The graphic above shows the RETAIL cost people pay. It creates discussion, which is great, but can be misleading at first.

I’d like to see this graph but pegged maybe to value of hourly minimum wage or some median wage value, that indexes this. OR by percent subsidy/excise. THAT would be more informative; what’s above is inflammatory.

You say potayto, I say potahto.
US subsidies are taxes everyone pays to oil companies. European taxes are instead paid in proportion to the amount of fuel consumed. Both are a deliberate attempt to modify behavior–the US manipulates the market to shield consumers from the cost of oil–probably a more “socialist” position than in Europe.

If you consider the point of view that well-off socialists (including many democrat politicians) are motived by creating a financial caste system to insulate themselves from lower-middle class folks that are smarter than them and/or good at what they do but are tied down or held back from becoming rich people by: a progressive tax system, excise taxes on goods/services that a higher percentage of their non-disposable income is tied to, high corporate income taxes, taxes on dividends, estate taxes, sales taxes, capital gains taxes, taxes on royalties, property taxes, school taxes, etc.

I wonder if I’m the only one who has real difficulty in distinguishing between the red and the green in this image. I would love the new breed of visualizers to be a little more on top of colour blindness issues.

Thanks for raising this important issue. Roughly 8% of people can’t differentiate the colours on this chart. For me, the first step of each direction of the scale looks the same, but as the tone gets darker it’s easier to see which is which.

Wikipedia is not a primary source, or even a secondary one, and at any rate there’s no indication on this graphic as to which of the zillions of Wikipedia articles provides this data. What’s the ultimate source of the data for this map? I find it hard to believe that it gives the price of gasoline in North Korea but not in South Korea.

@Tristan – I link to the Wikipedia post within the post, and you can see all the sources in the table. It’s not the best source, but it’s the most up-to-date I could find at the time. I think that’s why in this case the relative values are more interesting than the absolute ones.

The U.S. doesn’t subsidies the price of gas. There is an average of about 45 cents per gallon combined state and federal tax across the country. It’s not that the U.S. subsidies; it’s that other countries tax more.

Of course the U.S. subsidizes it’s gasoline, just in a less obvious fashion. Where other countries subsidize gasoline by their governments paying most of the cost per gallon, in essence subsidizing gasoline already produced, the U.S. government gives subsidies before any of the crude oil has been processed into gasoline. These subsidies come in the form of free or reduced price government land, no royalties paid by oil companies for oil extracted from U.S. Territory (such as from deepwater drilling), and direct payments in the form of grants, corporate welfare, and tax incentives. If we didn’t subsidize our gasoline our gas prices would still be lower than Europe’s gas prices, but more like Europe $9, US $7, per gallon.

In the era of Google, finding the relevant Wikipedia article should be easy, eh? Sources are listed for every country, though not all of them are working and some of them rather outdated (lots of 2008 data). Your right on the Koreas, however.

I believe that a few of the other comments also touched on this, but the reason that gas is so much more in the UK is due to taxes. I came across this site that breaks down the cost of gas in the UK and even includes a nice pie chart.

@Felix: I’m not particularly impressed with the source given for North Korea (http://www.travelmath.com/country/North+Korea). It seems to be a travel almanac (yet another tertiary source) and doesn’t itself give the source of its “estimate” for DPRK gas prices. In fact, just browsing through the site, it seems to be largely broken.

US drivers arguably drive further BECAUSE the gasoline price is (compared to other similarly wealthy nations) so much cheaper. Living farther from a city center is, therefore, a trade-off between higher property taxes and smaller living area (and possibly higher local sales taxes) in a city and lower property taxes, larger living area, and increased car expenses outside of a city. In other words, the cost of operating a car while living outside of a city were “offset” to a large extent by the benefits of living outside the city, and (so long as costs related to car-ownership remain low) provide greater benefits than living inside a city.

Of course, this is a bit of a chicken and egg story, too: developers drive urban sprawl, which can be rationalized by the greater benefits (as described above), greater movement to the ‘burbs, an increased cost of living in the “near suburbs” and a decreased cost of living in the “far suburbs” (aka exurbs). All this, though, is predicated on the low relative cost of transportation vs. living centrally.

Now, we are in a landscape that is a product of such policies. So, yes, “many US drivers also have greater distances to travel”. However, not looking at how we got to this point really misses an important lesson.

The urban sprawl may now be a thing of the past. If you look at where the U.S. housing market has recovered, it is with houses located inside cities and close to public transportation. Suburban homes continue to lose value and aren’t selling in spite of that, because they require so much gasoline just to live there. A big house and yard where several gallons of gas are required for grocery shopping and an hour commute to work is now much less attractive than a much smaller city house located within walking distance of all the shops or at least within walking distance of a bus stop.

These prices don’t reflect the taxes – which many countries, especially European countries, gross up to discourage use. It would be curious to see what the price is without subsidies or taxes – what the product actually costs. Tough to take out those reductions and additions to the data.

One factor that the map doesn’t account for is the local economy. Northern Africa has cheap gas because it wouldn’t sell if it wasn’t so cheap. If fuel cost more, then people would still be using horses and carts (and some still do). Fuel sells for more across the Mediterranean in Europe because people can afford to pay it.

I would guess that this map is almost identical to one representing the cost of living world wide, except that a few countries are artificially low thanks to subsidies (Venezuela, the US, etc.)

Your comment on a “few countries” with subsidies is ignorant and absurd. EVERY country has subsidies that artificially lower some prices. Almost every country with a coastline has large subsidies for commercial fishing. Brazil and Argentina have huge subsidies for beef, Australia, the UK, and New Zealand subsidize sheep. Russia subsidizes natural gas. many of the African countries subsidize petrol and kerosene. Canada subsidizes lumber.

While the US subsidizes oil exploration, they do not subsidize the price of gasoline at all. The cost of living in the US is higher than most of the rest of the world, except Western Europe, Japan, and a few major cities. So your claim is as wrong as it is specious.

Of course… the gas price itself is only part of the picture. If you divide the price of each country by relative purchasing power in order to get a rough idea of how much more (or less) people pay as part of their take-home pay for a gallon of gas (i.e., the RELATIVE VALUE of a gallon of gas).

For example: Looking at values for Chile (a few weeks back, when I was there), their price was equivalent to $5.50/gallon. However with Chile’s median PPP is roughly 1/3 that of the US, which makes the US-equivalent value of that gasoline roughly $16/gallon (i.e., the price of $5.50/gallon in Chile represents an roughly equivalent US-consumer-valuation of $16/gallon).

And what’s the relative price of a home in Chile vs the US? Healthcare? Mass transit? How much does a Chilean expect to have to pay for transportation costs every year, including subsidized trains and buses, versus a US resident? Gas is only one component of that. And how do any of them relate to median and average income? Any and all of this presented as discrete data sets is what professionals call “Lying With Statistics.” Without a well-rounded set of data this information is (intentionally?) misleading.

I think what would help put this graphic in perspective, although great already, is put it in comparison to how many miles are driven on average. Then we could see a true comparison. If people in the UK ,on average, drive 2-3x less there here in the US, then the gas price is comparable. If not, then we can see who really is paying for their commute. Great info though already! Thanks!

@Brent, after much reflection on your comment, I still fail to see the logic. This graphic _is_ a true comparison for gas prices.

The number of miles driven is a result of the gas price, not vice versa.

Suggesting that it should be factored into the comparison is a bit like saying:
“Food cost twice as much in country A than in country B.
The people in B eat more than they need.
The people of A are always hungry because they can’t afford more food.
Because these people eat different amounts, this should be taken into deciding if the price (lifestyle) of food is a true comparison of the price (financial) food.”

What do you actually mean by “then we can see who really is paying for their commute”?

This is a good visualization, but I hate – yes, hate – the scaling.
I like the scaling to US gas prices, but if a country is 10% more or 10% less, this is pretty much the same price. Having a different color for 0% difference is a poor choice.
Why not have the US + all countries within +/- 10% be the same color?
And -100% can’t really exist, right? (That would be $0.00 per gallon…)

Anyways, don’t mean to be too negative – great idea, just wish details were a bit different.

I don’t know John–what American bridges do you drive over? ;) I drive over one twice per day, and its great. Could there be some efficiency and capacity improvements? Sure, but the bridge is not crumbling. I wouldn’t say the American way is the “dumb” way–its just a different way. We have different driving patterns. Compared to most of Europe, where urban centers and the population are close together, the United States has large distances of wide-open spaces where people live, and they need cars to get to where they work in the cities. The emphasis on travel is different. And as a transportation planner, I can tell everyone here for a fact that there is an element of social engineering (behavior modification) built in to the justification and use of gas taxes. The actual taxation is not socialist, but certainly that is the intent. Well, to be fair, t is a multi-faceted intent. One element is behavior modification. The other part is simply a “use” tax which helps pay for maintaining and improving he current infrastructure. Gas taxes in my state are different from county to county, but on average, it is .40 cents to 55 cents per gallon of gas.

Bridges crumble in more places than can be seen by the one driving over them. Until you’ve gotten out of your car and done a proper bridge inspection, “the bridge I drive over isn’t crumbling” must be taken with a grain of salt. Infrastructure often has all of the appearance of strength it ever had until the thunderstorm sends it crumbling to the ground (to paraphrase Hari Seldon).

The political agenda of this slide is apparent: US has cheap gas compared to Europe. A less biased chart would look at the United States compared with other oil producing countries. From that POV, US oil looks pretty expensive. Europe as a buyer SHOULD be paying more than a producer. Simple supply chain economics.

The United States is the third largest oil producer in the world and would easily be the first largest if restrictions on production were reduced. This is a very different economic situation than the countries in Red. The fact that we import a lot of oil adds just another layer of complexity that this graphic does not provide insight on.

Look at the graphic and think of the message it sends. The story of the graphic is Europe more expensive than US. The dark red pulls your eyes to it. The question is, is that the important story or is that politics by graphic? If you did the same graphic of wheat or corn or soybean, you’d probably see the US cheaper than Europe too. Would that drive the politics towards raising adding wheat taxes in the US to compensate? No, because the politics are different. To get away from the politics, you need to deepen the analysis and that includes separating countries serving different roles in the supply chain. Then you get interesting questions raised, like “why is Canada more expensive and Mexico not?” And what about Norway and Russia. That’s an interesting graphic. This is more a political banner. Just my two cents.

We must nationalize the petroleum industry as it’s way too important to leave to for-profit companies. Rises in the cost of fuel affect nearly everything and so it’s in our collective, national, interest to do so.There’s absolutely no incentive for companies to pump as much as is really required as it will always be worth more tomorrow!

Comparing costs around the world is a dumb exercise. Don’t forget that it’s still possible to travel nearly everywhere in Europe by public transportation, but nearly impossible in the USA, so the cost is a much bigger deal here.

There are no dumb excersizes, especially when they spawn so many interesting thoughts and perspectives. I applaud the creator of the map (Nathan?) for his efforts. And unlike @bob I really don’t believe there is a political angle here – its just surprising to see the deviation in prices across the globe. Many in the US are unaware that gas prices can be double or triple that of the US in other parts of the world.

Of course the flip side it is its a bargain to visit the US, especially if you’re visiting from Europe and planning on driving alot on vacation.

There is a major difference than us and Europe. Europeans tend to live and work in the same place. IE they do not have the burb thing going on like here. This tends to keep it from hurting their pocket book as much.

There is an old saying :
100 years is a long time for an American and a 100 miles is a long way for a European. (something like that)

I think gas prices in plain numbers are not telling the full story. They should be compared with country salaries to show what they really mean for residents in each country. One example here: http://www.ideacode.eu/infographics-gas-prices

For one, such comparison would at least show that real % difference is not in range of 50% – 100%, but much much bigger…

I’m a European paying around $9/gallon. As to previous comments about prices influencing driving behavior (Europeans driving less because of higher prices): I don’t believe that is true. I think it has more to do with the fact that distances are smaller here, some areas densely populated, more traffic jams, etc. Within the US you probably see the same differences. Someone in NY city is not going to drive for hours every day in and around the city. Someone in the Midwest, with long, quiet roads, will.

What I do believe is that it the higher prices resulted in people buying smaller, more economical cars. But another factor influencing that choice are the costs of the car itself. The costs of gas are only a small part of the total cost of ownership (maybe 25-30%). The rest is sales tax (a lot higher for big cars), ownership tax (again higher for bigger cars), repair costs (again higher for bigger cars). And lastly there’s a cultural difference at play I think. People driving huge cars are sometimes seen as people trying to “compensate something with their big car”, or “boosting their ego”, things like that. Driving a normal sized, practical car is more of a down to earth thing

What you’re missing here is the relative travel to work, etc. I’d venture to say that most Americans travel further to work than in most of the countries that are showing higher prices. In addition, we, as a country, have made no marked effort for public transportation such as exist in London. They’re doing it right because they have to. When will Americans wake up?

“In addition, we, as a country, have made no marked effort for public transportation such as exist in London.”

There seems to be some trouble with people realizing the differences.
London is one of the largest cities in the world. And has a great transit just like New York.

Utsjoki is not a large city. Nor has it transit just like I guess is Rockwood.

Belgium is a small very urban and extremely populated state. Just like maybe District of Columbia. It’s easy to travel in small urban areas.
Alaska or Wyoming are not so dense nor are Finland and Norway.

In Holland you can’t drive 500km because you would end up being in Germany. Unless you drive in circles. In Finland you many people drive 200km per side for work.

New York and small town in Wyoming are not same. So are not London and small town in Iceland.
And Europe is not London any more than US is New York.

The prices in Lebanon are near 5$/gallon (25.33$ / 20 liter). Its highest than ever now (even more that when oil reached 150$/barrel).
Tomorrow the country is paralyzed due to strike of public transportation. They have some demands, some are related to the high tax on gas.

Drivers in Europe pay almost double what US drivers do. Have a look at this http://www.staveleyhead.co.uk/utilities/petrol-prices/ Its charts historic petrol prices, it clearly shows the difference in petrol price between US and UK, As a driver in the UK I really have no sympathy for drivers who pay $4 a gallon, as I used to work in the US I know that a gallon is roughly 4 litres, if you do your maths its about £0.61 a litre where as we pay £1.37 a litre and drivers in Norway pay even more.

This is cute, but useless- this is pump price, it doesn’t reflect subsidies, wars fought for oil, environmental cleanup, tax breaks, kickbacks and bribes, or a myriad of other costs of petroleum. What percentage of US taxes go to these things?

The US, Canada and China must be laughing there socks off with such cheap fuel. Dear fuels means that transport fees cost more which in turn means goods cost more. If goods cost more then wages have to be higher to purchase them. if wages are high then produce gets noncompetitive. That’s why so many countries in the EEC are going bust. They can no longer compete with the rest of the world

lower taxes in EU it’s outrageous i understand when oil is cheap 20-50$ but after 80$ a barrel it’s not wise to tax so high ,high taxes on gas is slowing the economy practicly EU is subsidizing US and other parts of the world we can easly reduce gas prices 30% ,of course the next day the world will pay 5% more on the barrel but that’s not our problem

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The price of fuel/oil/gas is also related to sovereign debt. Notice how fuel prices have risen as the Western Worlds debt has also risen, cos its the Oil Rich countries who are buying the debt, they lend us the money to buy their fuel !! I also believe the world price for fuel is a tool to justify costs/prices most companies buy fuel by tender and contracts and market price is never the trade price. BUt yes Europe is paying a hugely inflated price cos our corrupt Socialist Party Governments are taxing us every and anyway the can, to fund their Parties grip on power by employing their army of voters and Soldiers. Let them cos we are all heading for bankruptcy and depression so who cares anymore?

hi all, im venezuelan. the reason for such low price is political. please, read about feb/27/1989 “El caracazo”. The last time a goverment rised up the prices there were incredible riots nation wide, that ended up with the fall of all the stablished order in venezuela, and gave birth to the actual revolution.
the goverment knows its too cheap and they even loose money for every litter, but they will simply not rise it, for the reasons i told.